Mindblown: a blog about philosophy.

Mixed economy Some private businesses, driven by profit. Some controlled by government Private: mobiles, cars, computers Essential services: police, fire service, defence, social services. Goods and services which can benefit both consumer and society(merit goods) Taxes to the government Government places limits on the nature of business activity: restricting monopoly, control pollution from factories. Advantages…

Planned economy State ownership and control Consumer preferences is unimportant State decides what to produce E.g. Cuba, North Korea State ownership, control over economic resources Advantages: Central planning prevents duplication and competition Production based on needs not consumer spending patterns Long term planning Disadvantages No consumer choice No competition to improve product design and keep…

Economic systems: Market economy Private ownership Resources allocated towards making what consumers like Firm operate to make profit If consumers want to buy a product then the price will rise Restricted government role, limited to defence, police, justice systems E.g. Taiwan,USA Private property, profit motive, price system Advantages: Profit makes firm more effective Competition keeps…

The function of an economy Basic economic problem: scarcity and choice An economy is a framework or a system that attempts t tackle and solve economic problem. What to produce? What will be made and what will be sacrificed How to produce? Which production method For whom to produce? Target consumers In what quantities to…

Public cooperations These are the businesses in the public sector, nationalized, completely owned by the government. They’re operated by board of directors Advantages Managed with social objective rather than profit Loss making services might still be kept operation if there is social benfit Finances raised by the government Disadvantages Lack of profit leads to inefficiency…

Holding companies A company that owns and controls a number of separate businesses yet does not unite them into one unified company. They have diversified interests. They are separate and independent of each other for major decisions but there will always be  the possibility of centralized control from the directors over crucial issues such as…

Joint ventures When two businesses agree to work closely together on a project and create separate business to do so. Advantages Costs and risk are shared Different strengths Major markets in different countries Disadvantages Style of management and culture: may not blend in Error and mistakes may lead to blaming Business failure of one can…

Franchises Legal contract between two firms that allows one of them to use the logo, name and marketing methods of the other. The franchisee can then decide what legal structure to adopt Requires intial fee and contract Limitation on area of operation Design of premises Supplies purchased An annual payment to the franchiser based upon…

Cooperatives Common in agriculture and retailing All members can contribute to the running of the business, sharing workload, responsibilities and decision making. Advantages Buying in bulk Working together to solve problems and take decisions Good motivation of all members Disadvantages Poor management skills Capital shortage cause no sales of share to the non member general…

Setting up a company A memorandum of association: name of company, company objectives, location of register company, address of head office, maximum share capital for which the company seeks authorization and declared aims of the business, statement that the company has limited liability. Articles of association: internal rules of company eg power of director,rights and…